Based in Newton, Mass., with the majority of its employees based in Toronto, Canada, ExtendMedia will allow Cisco to help service providers deliver multiscreen offerings as the market transitions to IP video.
"As the video market transitions and consumers expect multiscreen engagement, service providers are enhancing their infrastructure to manage and deliver video to any device, while providing a rich user experience," said Enrique Rodriguez, SVP and general manager of Cisco's Service Provider Video Technology Group.
The news follows a number of related acquisitions by Cisco, which last year agreed to drop about $3.3 billion on videoconferencing systems maker Tandberg and $590 million on Flip camera manufacturer Pure Digital.
ExtendMedia is understood to bring to Cisco a strong software team that is familiar with the complexities of delivering multiscreen video over IP networks.
ExtendMedia's CMS software, which will integrate with Cisco's current IP video offerings, will be a core component of Cisco's next-generation video architecture.
If the acquisition goes through, it would mark Cisco's third this year. In May, it bought up optical-networking company CoreOptics and product design consulting firm Moto Development Group.
Overall, half of U.S. consumers now watch online video at least once a week, according to recent research conducted by research/consulting firm Frank N. Magid Associates on behalf of video site Metacafe. By contrast, in 2009, 43% of consumers reported watching Web video at least once a week.
The potential of video advertising on the Web is drawing much attention, as eMarketer projects that video ad sales will grow from $775 million in 2009 to $3.1 billion this year.